SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: April 27, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-15046
Westerbeke Corporation
----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-1925880
------------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
Avon Industrial Park, Avon, Massachusetts 02322
- - ------------------------------------------- -------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (508) 588-7700
No Change
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(Former name, former address and former fiscal year if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was to file such reports.) and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Outstanding at
Class June 1, 1996
----- ---------------
Common Stock, $.01 par value 2,071,850
WESTERBEKE CORPORATION AND SUBSIDIARY
INDEX
Page
Part I - Financial Information
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets as of April 27, 1996 and
October 28, 1995 3
Consolidated Statements of Operations for the three
months ended April 27, 1996 and April 29, 1995 4
Consolidated Statements of Operations for the six
months ended April 27, 1996 and April 29, 1995 5
Consolidated Statements of Cash Flows for the six
months ended April 27, 1996 and April 29, 1995 6
Notes to Consolidated Financial Statements 7-8
Item 2 -
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-10
Part II - Other Information 11-12
Signatures 13
WESTERBEKE CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
April 27, October 28,
1996 1995
----------- -----------------
(Unaudited) (Derived from
ASSETS Audited Financial
Statements)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 761,100 $1,322,200
Accounts receivable, net of allowance for
doubtful accounts of $60,400 and $60,500,
respectively 2,117,400 1,541,400
Inventories (Note 2) 4,707,600 4,313,500
Prepaid expenses and other assets 133,600 134,100
Deferred income taxes 330,900 316,200
-------------------------
Total current assets 8,050,600 7,627,400
Property, plant and equipment, net 1,676,500 1,594,900
Other assets, net 1,129,900 1,140,800
Investments in marketable securities 736,800 486,100
Note receivable - related party 143,100 149,400
-------------------------
$11,736,900 $10,998,600
=========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving line of credit $ 197,900 $ -
Current portion of long-term debt 22,700 22,100
Current portion of obligations under capital
leases - 12,700
Accounts payable 1,602,500 1,077,600
Accrued expenses and other liabilities 298,100 380,400
Accrued income taxes 39,000 226,300
-------------------------
Total current liabilities 2,160,200 1,719,100
-------------------------
Deferred income taxes 134,000 144,200
Long-term debt, net of current portion 33,200 44,700
-------------------------
167,200 188,900
-------------------------
Stockholders' equity:
Common stock, $.01 par value; authorized
5,000,000 shares; issued and outstanding
2,070,850 shares at April 27, 1996 and
2,064,650 at October 28, 1995. 20,700 20,600
Additional paid-in-capital 5,908,200 5,902,100
Unrealized gain on marketable securities 126,900 71,200
Retained earnings 3,353,700 3,096,700
-------------------------
Total stockholders' equity 9,409,500 9,090,600
-------------------------
$11,736,900 $10,998,600
=========================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
WESTERBEKE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
-----------------------
April 27, April 29,
1996 1995
---------- ----------
(Unaudited)
<S> <C> <C>
Net sales $5,535,200 $5,245,000
Cost of sales 4,182,100 4,029,500
-----------------------
Gross profit 1,353,100 1,215,500
Selling, general and administrative expense 736,900 656,100
Research and development expense 237,400 212,700
-----------------------
Income from operations 378,800 346,700
Interest (income) expense, net 1,500 (9,800)
-----------------------
Income before income taxes 377,300 356,500
Provision for income taxes 151,900 143,600
-----------------------
Net income $ 225,400 $ 212,900
=======================
Net income per share $ 0.10 $ 0.09
=======================
Weighted average common and common equivalents
shares outstanding 2,301,728 2,241,738
=======================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
WESTERBEKE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Six Months Ended
--------------------------
April 27, April 29,
1996 1995
---------- ----------
(Unaudited)
<S> <C> <C>
Net sales $9,464,900 $9,550,400
Cost of sales 7,403,900 7,378,700
--------------------------
Gross profit 2,061,000 2,171,700
Selling, general and administrative expense 1,269,000 1,267,000
Research and development expense 404,200 381,200
--------------------------
Income from operations 387,800 523,500
Interest income, net 44,100 22,700
--------------------------
Income before income taxes 431,900 546,200
Provision for income taxes 174,900 219,300
--------------------------
Net income $ 257,000 $ 326,900
==========================
Net income per share $ 0.11 $ 0.15
==========================
Weighted average common and common
equivalents shares outstanding 2,287,412 2,246,976
==========================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
WESTERBEKE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
------------------------
April 27, April 29,
1996 1995
--------- ---------
(Unaudited)
Cash flows from operating activities:
<S> <C> <C>
Net income $ 257,000 $ 326,900
Reconciliation of net income to net cash
provided (used) by operating activities:
Depreciation and amortization 203,400 206,900
Deferred income taxes (24,900) 2,300
Changes in operating assets and liabilities:
Accounts receivable (576,000) (824,600)
Inventories (394,100) (628,500)
Prepaid expenses and other assets 500 (19,900)
Accounts payable 524,900 176,300
Accrued expenses and other liabilities (82,300) 155,300
Accrued income taxes payable (187,300) 53,900
-------------------------
Net cash used by operating activities (278,800) (551,400)
-------------------------
Cash flows from investing activities:
Purchase of property, plant and equipment (274,200) (105,700)
Proceeds from payment of note receivable -
related party 6,300 4,800
Investment in marketable securities, net (194,900) (159,600)
-------------------------
Net cash used in investing activities (462,800) (260,500)
-------------------------
Cash flows from financing activities:
Proceeds from revolving line of credit 197,900 -
Proceeds from exercise of employee stock options 6,200 -
Principal payments on long-term debt and capital
lease obligations (23,600) (58,200)
-------------------------
Net cash provided (used) in financing activities 180,500 (58,200)
-------------------------
Decrease in cash and cash equivalents (561,100) (870,100)
Cash and cash equivalents, beginning of period 1,322,200 1,727,600
-------------------------
Cash and cash equivalents, end of period $ 761,100 $ 857,500
=========================
Supplemental cash flow disclosures:
Interest paid $ 4,500 $ 5,500
Taxes paid $ 387,400 $ 112,700
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
WESTERBEKE CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Significant Accounting Policies:
-------------------------------------------
A. Financial Statements
------------------------
The condensed consolidated financial statements included herein
have been prepared by Westerbeke Corporation ("the Company"),
without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. While certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules
and regulations, the Company believes that the disclosures made
herein are adequate to make the information presented not
misleading. It is recommended that these condensed statements be
read in conjunction with the consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-K
for the fiscal year ended October 28, 1995.
In the opinion of the Company, all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly the
financial position of Westerbeke Corporation and Subsidiary as of
April 27, 1996, the results of their operations for the three and
six months ended April 27, 1996 and April 29, 1995, and the cash
flows for the six months then ended, have been included.
B. Basis of Presentation
-------------------------
The condensed consolidated financial statements include the
accounts of the Company and its wholly owned subsidiary,
Westerbeke International, Inc. (a Foreign Sales Corporation). All
significant intercompany transactions and accounts have been
eliminated. Westerbeke International, Inc., has been inactive
since fiscal year 1987.
2. Inventories
-----------
The Company uses the last-in, first-out (LIFO) method to value
inventory.
Inventories are comprised of the following:
<TABLE>
<CAPTION>
April 27, October 28,
1996 1995
---------- -----------
<S> <C> <C>
Raw materials $3,896,500 $3,319,000
Work-in-process 308,400 322,700
Finished goods 502,700 671,800
-------------------------
$4,707,600 $4,313,500
=========================
</TABLE>
The Company has estimated both the year-end inventory levels and
the inflation/deflation which will occur during the fiscal year.
The Company anticipates an increase in its LIFO valuation account
as of October 26, 1996. Accordingly, the Company has recorded an
increase of $25,000, on a pro rata basis, in the LIFO reserve
during the first six months of fiscal 1996. During the first six
months of 1995, the Company recorded, on a pro rata basis, an
increase of $50,000 in the LIFO reserve. Inventories would have
been $1,229,000 higher at April 27, 1996 and $1,204,000 higher as
of October 28, 1995, if the weighted-average first-in, first-out
(FIFO) method had been used. Inventory cost determination on the
FIFO method approximates replacement or current cost.
Item 2 - Management's Discussion and Analysis
Of Financial Condition and Results Of Operations
Results of Operations -
- - -----------------------
Net sales increased by $290,200, or 6%, during the second quarter of
fiscal 1996 and decreased $85,500 or 1% for the first six months of fiscal
1996 as compared to the same periods in fiscal 1995. The increase in
second quarter net sales is primarily attributable to higher unit volume
of the Company's marine generator products. The decrease in net sales for
the first six months of fiscal 1996 is primarily the result of lower unit
volume to the Company's OEM customers and lower parts revenues during the
first fiscal quarter of 1996.
Gross profit increased $137,600, or 11% during the second quarter and
decreased $110,700 or 5% for the first six months of fiscal 1996 as
compared to the same periods in fiscal 1995. As a percentage of net
sales, gross profit increased to 24% during the second quarter of fiscal
year 1996, as compared to 23% for the second quarter of fiscal 1995, and
decreased to 22% for the six months ended April 27, 1996 compared to 23%
for the same period ended April 29, 1995. The increase as a percentage of
net sales during the second quarter of fiscal 1996 is attributable to an
increase in unit volume of the Company's large generator products. The
decrease in the percent gross profit for the first six months of fiscal
1996 is primarily attributable to lower spare parts revenue during the
period compared to the same period in fiscal 1995.
Operating expenses increased $105,500 or 12% for the second quarter and
$25,000 or 2% in the first six months of fiscal 1996, as compared to the
same periods in fiscal 1995. Research and development costs have
increased due to the addition of personnel and higher costs related to
achieving compliance with federal and state emission requirements.
Selling and administrative expenses have increased primarily due to higher
costs associated with increased advertising and marketing promotion.
Net interest income decreased $11,300 during the second quarter and
increased $21,400 for the first six months of fiscal 1996 as compared to
the same periods in fiscal 1995. The decrease in the second quarter is
primarily due to lower interest income caused by lower invested cash
balances during the period. The increase in the first six months of
fiscal 1996 is due to dividends received from the Company's marketable
securities.
For the second quarter ended April 27, 1996, the Company reported net
income of $225,400, compared to a net income of $212,900 for the same
period in fiscal 1995. For the six months ended April 27, 1996, the
Company reported net income of $257,000 as compared to net income of
$326,900 for the six-months ended April 29, 1995. The increase in net
income for the second quarter of fiscal 1996 is primarily attributable to
the increase in net sales for the period. The decrease in net income for
the six months ended April 27, 1996 is primarily attributable to lower
unit volume during the first three months of fiscal 1996 compared to the
same period in 1995.
WESTERBEKE CORPORATION AND SUBSIDIARY
Liquidity and Capital Resources
- - -------------------------------
During the first six months of fiscal 1996, net cash used by operations
was $278,800, compared to net cash used by operations of $551,400 for the
first six months in fiscal 1995. The increase in cash flow from
operations is primarily attributable to increases in accounts payable and
smaller growth in accounts receivables and inventories for the six month
period ended April 27, 1996, as compared to the same period in fiscal
1995. The increase in accounts payable is the result of the timing of
inventory disbursements for the period. Smaller growth of accounts
receivable is directly attributable to the timing of cash receipts from
several large customers.
During the six months ended April 27, 1996, the Company purchased
property, plant and equipment of $274,200. The purchases were primarily
for design equipment to be used in development of new Company products.
The Company plans to spend approximately $200,000 more on emission testing
equipment during the remainder of the year.
On June 4, 1992, the Company entered into a $3,000,000 line of credit
agreement (the "Credit Agreement") with State Street Bank and Trust
Company, collateralized by all inventory and receivables of the Company.
At April 27, 1996, the Company had approximately $2,872,500 in unused
borrowing capacity under the Credit Agreement and approximately $127,500
committed to cover the Company's reimbursement obligations under certain
letters of credit. The Credit Agreement expires on March 31, 1997.
On January 23, 1996, the Company entered into a $500,000 revolving line of
credit agreement (the "Revolving Line of Credit") and term loan facility
(the "Term Loan") with State Street Bank and Trust Company, collateralized
by various emission testing and product development equipment to be
purchased and subject to working capital and equity covenants. On June
30, 1996 the Revolving Line of Credit will terminate and be automatically
converted into a five year Term Loan bearing a interest rate calculated at
the bank's cost of funds plus 2.25%. At April 27, 1996 the Company had
borrowed $197,900 under the Revolving Line of Credit.
Management believes cash flow from operations and borrowings available
under the Credit Agreement and the Revolving Line of Credit will provide
for working capital needs, principal payments on long-term debt, and
capital and operating leases through fiscal 1996.
Domestic inflation is not expected to have a material impact on the
Company's operations.
The cost of engine blocks and other components is subject to foreign
currency fluctuations (primarily the Japanese yen). Exchange rate
fluctuations have had a minimal impact on the Company during the first two
fiscal quarters of 1996.
Part II. Other Information
Item 1 Legal Proceedings
None to report
Item 2 Changes in Securities
None to report
Item 3 Default Upon Senior Securities
None to report
Item 4 Submissions of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders (the "Meeting") of
the Company was held March 22, 1996.
(b) Not applicable because:
(I) proxies for the Meeting were solicited pursuant to
Regulation 14 under the Securities Exchange Act of 1934; (ii) there was
no solicitation in opposition to management's nominees as listed in the
Company's proxy statement dated February 28, 1996; and (iii) all such
nominees were elected.
(c) The matters voted upon at the Meeting were as follows:
(i) The election of one Class A director of the Company.
Gerald Bench
FOR 1,925,907
WITHHOLD AUTHORITY 7,080
(ii) Approval of the Westerbeke Corporation 1996 Stock
Option Plan.
FOR 1,427,276
AGAINST 66,051
ABSTENTIONS AND BROKER NON-VOTES 439,690
(iii) A proposal to ratify the Board of Directors'
selection of KPMG Peat Marwick LLP to serve as the Company's independent
auditors for the Company's fiscal year ending October 26, 1996.
FOR 1,925,942
AGAINST 3,600
ABSTENTIONS AND BROKER NON-VOTES 3,445
Item 5 Other Information
None to report
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
None required
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during
the period covered by this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WESTERBEKE CORPORATION
(Registrant)
Dated June 5, 1996 /s/ John H. Westerbeke, Jr.
John H. Westerbeke, Jr.
Chairman and President
Dated June 5, 1996 /s/ Carleton F. Bryant III
Carleton F. Bryant III
Executive Vice President and
Principal Financial and Accounting
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000796502
<NAME> WESTERBEKE CORP.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-26-1996
<PERIOD-END> APR-27-1996
<CASH> 761,100
<SECURITIES> 0
<RECEIVABLES> 2,177,800
<ALLOWANCES> 60,400
<INVENTORY> 4,707,600
<CURRENT-ASSETS> 8,050,600
<PP&E> 4,658,900
<DEPRECIATION> 2,982,400
<TOTAL-ASSETS> 11,736,900
<CURRENT-LIABILITIES> 2,160,200
<BONDS> 0
0
0
<COMMON> 20,700
<OTHER-SE> 9,388,800
<TOTAL-LIABILITY-AND-EQUITY> 11,736,900
<SALES> 9,464,900
<TOTAL-REVENUES> 9,464,900
<CGS> 7,403,900
<TOTAL-COSTS> 7,403,900
<OTHER-EXPENSES> 1,673,200
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,200
<INCOME-PRETAX> 431,900
<INCOME-TAX> 174,900
<INCOME-CONTINUING> 257,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 257,000
<EPS-PRIMARY> .11
<EPS-DILUTED> 0
</TABLE>
